Model company balance sheet – drawing up and reading a balance sheet

A balance sheet distinguishes between wealth and debts, and is drawn up differently depending on the company type. Here are some examples. 

A company’s balance sheet differentiates wealth (assets) from debt (liabilities). A surplus of wealth over debt is called net assets or equity.

Wealth can comprise cash, post office or bank account balances and property (vehicles, equipment, real estate, etc.). In accountancy, this wealth is known as assets. These assets (wealth and investments) provide information about the way in which the company has invested the capital that it had at its disposal.

Debt capital (liabilities), on the other hand, is composed of outstanding debts (creditors) and debts owed to the bank or to private individuals. Together, debt capital and equity comprise the liabilities side of the balance sheet. Liabilities (capital or financing) show who made capital available to the company.

On a balance sheet (this term comes from the Italian word 'bilancia', meaning 'balance'), assets and liabilities are compared and balanced against each other. The balance sheet is only ever a snapshot. The balance sheet date is usually December 31. 

A model balance sheet

Assets are separated into current assets and fixed assets:

  • Current assets include liquid assets (cash, post office and bank balances) and other items of wealth (client assets (debtors), inventories) that can be converted into cash in the short term (within one year).
  • Fixed assets comprise assets that are available to the company in the long term (generally over several years), for example for office set-up, commercial premises, equipment, etc.

The liabilities side differentiates between equity and debt capital:

  • Debt capital (or debts) corresponds to claims from external creditors vis-à-vis the company’s wealth. Debt capital is categorized according to maturity (maturities due first are at the top of the list).
  • Equity (net wealth) is understood to mean claims from owners’ vis-à-vis the company’s assets. For public limited companies, share capital is included; for limited liability companies, this includes share capital, both reserves and, where applicable, retained profit.

Balance sheet as at December 31, 2013

Assets (wealth)

CHF

%

Liabilities (debts)

CHF

%

Current assets

 

 

Short-term liabilities

 

 

Liquid assets (cash, post office, bank)

20,000

5

Bank (current account)

28,000

7

Debtors

10,000

2.5

Creditors

14,000

3.5

Securities (shares, bonds)

40,000

10

Sister loan

10,000

2.5

Operating materials

8,000

2

 

 

 

Software

50,000

12.5

 

 

 

Total current assets

128,000

32

Total short-term liabilities

52,000

13

 

 

 

 

 

 

Fixed assets

 

 

Long-term liabilities

 

 

IT equipment

160,000

40

Principal personal loan

40,000

10

Office equipment

36,000

9

Bank loan

120,000

30

Office furniture

44,000

11

 

 

 

Vehicles

32,000

8

 

 

 

Total fixed assets

272,000

68

Total long-term liabilities

160,000

40

 

 

 

Equity

168,000

42

 

 

 

Net profit

20,000

5

 

 

 

 

 

 

Balance sheet total

400,000

100

Balance sheet total

400,000

100


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Last modification 22.08.2018

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